One DC Restaurant Group’s Nimble Strategy to Pay its Employees During COVID-19
“Obviously, we weren't planning for a global pandemic.”
In just the first three weeks of March, the National Restaurant Association estimates that the industry lost $25 billion in sales and more than 3 million jobs. Amidst the barrage of layoffs and closures, some businesses are still hanging on, and DC’s King and Queen of carbs have figured out a way to take care of their empire.
Andrew Dana and Daniela Moreira made the difficult decision to close all four of their restaurants on March 16, and they just reopened three this week. “This thing was so fast moving and nobody knew what to expect day to day,” Dana explains. “Without a well thought-out plan, to just continue to stay open didn't seem the right thing to do.”
Through it all, they continued paying their 145 hourly employees at Call Your Mother, Timber Pizza, Turu’s Pizza, and Ballston Service Station. “We've always tried to keep two to three payrolls in the bank just in case there is some sort of doomsday thing,” Dana says. “Obviously, we weren't planning for a global pandemic.”
This is an unusual feat in the industry. “Many restaurants aim to be in a position to have a ‘rainy day fund’ for times of emergency, but given the razor-thin profit margins most restaurants operate under, this is not always possible,” says Kathy E. Hollinger, President and CEO of the Restaurant Association Metropolitan Washington. “Restaurants also have fixed costs that, without revenue coming in, it is near impossible to sustain a financial model to get through a week of limited business, let alone a month or months.”
The business’ emergency funds covered a couple of payrolls, but then they had to get creative. “Everybody's doing fundraisers, and I went on that DC Tip Jar and I saw over 3,000 names and I was like, ‘I'm not sure our staff is going to be able to stand out in a sea of names,’” Dana explained. “Instead of asking for a donation, how can we actually give some real value?”
While still closed, the duo launched an online fundraiser, offering big-ticket items like a massive pizza party, private dinner, baking classes, a one year cut-the-line pass at Call Your Mother, pizza and bagel naming rights, and swag. “We thought it was a nice way for people to get something on the calendar for when all this madness is done -- something to look forward to while helping us pay the bills in the short term,” he says. “Through the fundraising and the online store, we raised another almost $50,000, which can cover a payroll on its own.”
During the two weeks they were closed, Dana and Moreira devised a plan to safely open their doors for takeout at Call Your Mother, Timber, and Turu’s. Before bringing people back to work, they polled their staff to find out who can safely get to the restaurants, and who lives with anyone high-risk or is at-risk themselves.
Following best practices put out by industry organizations and advice from friends in the medical field, their system limits the number of employees in the building and keeps customers out of the restaurant. “We worked on an order-ahead process, so you're never exchanging a credit card or cash,” Dana explains. “There's pretty detailed instructions of exactly how to order and how to pick up. So, once you get there, we just call your name, we put it down, you grab it. Nobody's touching, you're never coming close to anybody else.”
After a successful test run baking bagels and delivering them to local hospitals, they reopened Call Your Mother on March 30 and Timber and Turu’s on March 31. “It feels low-risk and it’s contactless,” Dana says. “It feels like we're doing a good job.”
Even with takeout orders and a special Passover menu to-go, business is not like it used to be. The partners aren’t paying themselves right now, and are barely making ends meet. “Dani, Chris [Brady] and I have all floated some of our own personal money to make payroll. We're doing everything we can to bridge the gap until hopefully help is on the way,” Dana says.
To be clear, the situation that Dana and Moreira is the exception in the restaurant industry right now, not the rule. The coronavirus has already devastated restaurants across the country, with 3% of operators closing their restaurants permanently, and 11% more anticipating they will do so within the next 30 days, according to a survey by the National Restaurant Association.
For restaurants that have remained open, the hope is that the local and federal government will step into help -- with state microgrants, loans from the Small Business Administration, and through the CARES Act. “Is this sustainable forever in this form? No,” Dana says. How long they last depends on how much financial aid they receive. He says the maximum loan amount would be about two and half months of payroll.
“The federal relief programs outlined by the CARES Act will offer some support for restaurants, but it also has flaws,” Hollinger says. RAMW is working to ensure that the next phase of legislation includes improvements to meet the needs of the industry. “We are asking that they adjust the timeline to have costs and payroll waived once a restaurant is legally allowed to re-open at full capacity. We are also urging regional and congressional leaders to help identify a plan where small businesses have financial cover, assistance, or forgiveness with landlords -- as paying rent is a big challenge and concern right now.”
Some federal loans will be forgiven for employers who keep their employees on payroll. “To us, that felt like validation for trying to do the right thing,” Dana says. Others who have already been forced to lay off staff won’t be so lucky. “If you're adding major expenses to your monthly payments after all this, it certainly is not a recipe for long-term success.”
As if juggling four businesses and 145 employees wasn’t challenging enough, Dana and his partners were also in the process of opening two new locations of Call Your Mother (in Georgetown and Capitol Hill) and a “sorta South American” café, restaurant, and bar that will anchor a new hotel project in the West End. “You’ve got to compartmentalize,” Dana says. “We're looking at it as the silver lining is that they didn't open and then immediately have to close.”
For the new bagel shops, they’re paying rent on one space and are still on the hook for construction costs. “We’re still paying our contractor and we're still trying to pay our bills,” Dana says. “It's a whole supply chain. If we don't pay our contractor, if we don't pay our suppliers, how do they pay their bills?”
Johanna Hellrigl is the executive chef of the forthcoming South American concept Mercy Me, which is now delayed indefinitely. “It’s been a really difficult thing because we had finalized the menu,” she says. “We were at the point where I just want to share it with the world and the DC community.” Instead of featuring late winter/early spring ingredients, her debut menu will now be for the summer. “I have to go back to the drawing board and save those things for later.”
Hellrigl is also taking this time to listen to the community’s needs and adapt -- making her bar, restaurant, and cafe a comfortable and welcoming place for a community that is finding its new normal. Plus, as she develops the menu, her focus is also on championing local farmers.
“That’s one of the most important things for us when we get back, is how do we support them and what they have been ready to grow?” she says. “This is going to be a time where we need to make sure we are filling a void and opening with something that people really want to see and want to have and feel after going through all this. It’s really about making sure that it speaks to everyone, so whether it’s an affordability question or whether it’s an approachability question.”
With Hellrigl preparing Mercy Me for its eventual launch, Dana and Moreira’s attention is on riding out the storm with their four existing restaurants. They are members of the newly formed DC Hospitality Coalition to share resources and lessons with their industry colleagues, and they are continuing to make food donations to healthcare workers.
A few weeks after the successful re-opening up Call Your Mother in Park View, the team regrouped internally and asked staff what else they could do to support them. After hearing them out, they decided to open a second bagel shop in Barracks Row in Capitol Hill, taking orders from a limited menu a day ahead of time.
"What we found was that staff did want to work, and noticed the highest response was from those who live in Capitol Hill area," Dana says. "But because we weren't allowing team members to take public transit, we thought: we have the staff, we can produce bagels, and we have a shop -- let's do it."
Looking ahead, Dana is unwavering in his characteristic positivity. “We're all in this together. Not just restaurants, the whole world. So we find some comfort in that we're all going to have to find a way through this together,” he says. “If and when we do make it to the other side, I think people are going to come out and support restaurants in droves.”
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